Victory: "Close the ENRON Loophole" Bill is Small Step In Right Direction
After a three year battle by the New England Fuel Institute and its industry and coalition allies, legislation is expected to be enacted into law this week that will help close the Enron Loophole. The bill passed as part of the larger Farm Bill legislation last week, and was vetoed by the President over funding concerns earlier this week. As this issue of NEON went to press, members of Congress were on the verge of overriding his veto and passing the measure.
Thank you to all of our members and allies who supported our efforts to "Close the Enron Loophole" – this vital battle against "dark market trading" and excessive speculation is far from over… but this is a major victory and we hope for your continued support as we continue the fight!
While a great victory for NEFI and the industry, it is no "magic bullet." Here is an analysis by NEFI’s Vice President for Public Policy, Jim Collura:
What this bill will do:
This is a step in the right direction. This bill would give additional powers to the principal federal regulator, the Commodity Futures Trading Commission (CFTC), to review annually contracts on "dark" electronic exchanges that are exempt under the “Enron Loophole,” and allow regulation of contracts that the CFTC determines affect price. It would also limit the size of positions that traders can take on certain exempt markets. Moreover, passage of this bill indicates a willingness on the part of Congress to act on this issue, and has brought a lot of Congressional and media attention – opening the door and political cover to tougher solutions down the road.
What this bill WILL NOT do:
First, the bill is no "immediate" or "magic" bullet. The legislation will require nearly a year to implement through new rulemakings. Also, this legislation does not “close” the loophole per say, but rather empowers the CFTC to close it, and that is unlikely to happen under the current administration. The CFTC is currently plagued with personnel and funding concerns, as well as an Acting Chairman that is less than enthused about steel-fisted oversight and regulation …and won't even admit that speculation is a problem! Also, the bill does not address the "foreign markets loophole," the "energy swaps trading loophole," or the need for tough new regulation such as increased margin requirements, transaction fees, and other measures to discourage (or even eliminate altogether) the role that investors with no tie to the actual commodity are having on the market. Therefore, the battle is far from over – and as it moves onward, you can be sure that NEFI will be among those leading the charge!
Other Washington developments concerning speculation:
Sean Cota of Cota & Cota (Bellows Falls, VT) and immediate past NEFI Chairman of the Board, is scheduled to represent the industry at the first meeting of the CFTC's Energy Market Advisory Committee (EMAC) on June 10, 2008 in Washington, DC. He will urge tough oversight of "dark market" energy trading and other industry priorities.
Petroleum Marketer Gary Ramm, of Inland Oil Company in Ephrata, Washington, delivered impressive testimony on futures market speculation before a U.S. House Agriculture Subcommittee last week. You can read his testimony and that of the other panelists online (click here).
The Senate Homeland Security Committee held a special hearing on institutional investor influence in commodity prices this week. Senator Susan Collins during the hearing mentioned her meeting with the Maine Oil Dealers Association during last week’s Day on the Hill, who explained to her the devastating impact that speculation has had on heating oil companies and their consumers. The testimony of Michael Masters, of Masters Capitol Management LLC was especially well received. Masters delivered a compelling argument that institutional investors are now driving prices to excessive levels, and urged Congress to act – particularly by closing the "Energy Swaps Trading Loophole." After the hearing, Chairman Joe Lieberman (I-CT) promised new legislation to deal with this issue.
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Thanking All Those That Participated in "Day on the Hill"
NEFI would like to thank everyone from New England that participated in what was the most important and successful industry "Day on the Hill" on Thursday, May 15th:
New England Fuel Institute (www.nefi.com)
Shane Sweet, President & CEO
James Collura, Vice President, Public Policy
Bill Riordan, Advanced Fuel Solutions
Independent Oil Marketers Association (IOMA) of New England (www.iomane.com)
Peter Romano, Executive Director
Bobby White, Counsel
Jim Garret, Volta Oil Company
Independent Connecticut Petroleum Association (www.icpa.org)
Gene Guilford, Executive Director
Tom Devine, Devine BioHeat
Jim Meehan, Peterson Oil Co.
Maine Oil Dealers Association (www.meoil.com)
Jamie Py, President
Steve Martin, Webber Energy
Massachusetts Oilheat Council (www.massoilheat.org)
Michael Ferrante, President
Alisha Frazee, Association Specialist
Oil Heat Institute of Rhode Island (www.oilheatinri.com)
Julie Gill, Executive Director
Vic Allienello, East Providence Fuel Oil
Dennis Brennan, Brennan Oil & Heating
Mike Januario, Sunshine Oil Co.
Louise Giguere LeBlanc, Giguere & Marchand Oil Service
Vermont Fuel Dealers Association (www.vermontfuel.com)
Matt Cota, Executive Director Sean Cota, Cota & Cota
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Victory: DOE Suspends Crude Deliveries to Strategic Petroleum Reserve
In another major victory for the industry, the United States Department of Energy announced that it would suspend deliveries of crude supply to the nation’s Strategic Petroleum Reserve (SPR) for the second half of 2008. The suspension represents a reversal of the Bush administration's longstanding policy to fill the SPR to capacity, and comes just one month after an industry letter (click here) and similar statements by Airline and Trucking trade groups, urging the President to stop filling the reserve. The suspension ends DOE's plan to increase the SPR fill rate from the current 70,000 barrels per day to 76,000 barrels per day beginning July 1st. Currently, the SPR, which has a capacity of 727 million barrels, is 97 percent full.
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PMAA Preparing Comments to FTC on Proposed Market Manipulation Rule
The Petroleum Marketers Association of America, in a working group at last week's Washington Conference, announced plans to submit comments to the Federal Trade Commission on a proposed rule that would establish tough new rules against "market manipulation" in the wholesale crude oil, gasoline, and distillate fuel markets. The new authority was provided them in the energy bill signed into law this last December. PMAA will make it clear that there is no evidence of wholesale or retail "price gouging" or "manipulation." PMAA expects to point to runaway speculation and unregulated "dark trading markets" as the reason for the recent run-up in energy prices, and urge the FTC to take into consideration its impact on wholesale prices. NEFI will support this effort and inform members of new developments.
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This week the U.S. House of Representatives voted 324-84 to approve a measure that would outlaw price manipulation by OPEC and create a new Department of Justice Petroleum Task Force to investigate petroleum industry anti-trust issues. The bill is doomed, however, as Senate Republics have promised to filibuster the bill and the President has issued a veto threat. Read More
The Northeast/Mid-West Senate Coalition, lead by Sens. Jack Reed (D-RI), Collins (R-ME), and Sanders (I-VT), have advanced a proposal to advance a $1 billion supplemental for current year LIHEAP funding on the Senate floor. Unfortunately, it is likely the President will veto the broader funding bill to which it was attached. NEFI supported this effort and will continue to support efforts to obtain additional LIHEAP funding.
The promise of Coal-to-liquids technology, which would produce a domestic, clean burning liquid fuel derived from coal, was highlighted by CNN’s American Morning program (click here). NEFI is a member of the Coal-to-liquids coalition (www.futurecoalfuels.org).
The EPA announced that it will solicit public comment on a request by Texas Gov. Rick Perry (R) for a temporary national waiver of the federal renewable fuel mandate, due to escalating food prices. Perry's request would reduce the 2008 renewable fuel mandate from 9 billion gallons to 4.5 billion gallons for one year. The ethanol industry says that rising energy costs are behind the increase in food prices, not the renewable fuels mandate.
President Bush met with Saudi Arabian King Abdullah on rising crude oil prices last week. The Saudis told Bush that a decision was made May 10 to increase Saudi output by 300,000 barrels per day to 9.45 million barrels per day in June at the request of Saudi customers, and that increase is sufficient for now. The Saudi position was announced by Saudi Oil Minister Ali al-Naimi in Riyadh following a meeting between Bush and the Saudi king.
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• The 2008 Visions Conference will be held at the Hilton Boston Logan Airport Hotel in Boston, MA on September 8-10, 2008. The program is taking shape and information and registration is available at www.visions2008.org. Tracy Goodwin, NEFI VP for Events, is pulling together the details. Craig Snyder of Wesson Inc., and Don Craft, Consultant to Global Petroleum, have headed up the development of the new Visions event.
• The 2009 North American Heating and Energy Expo is scheduled for June 9-10, 2009 at the Hynes Convention Center. For information go to www.nefi.com/expo.
• Sign up for NEFI's 2008 Fall Energy Conference to Napa Valley, September 23 – 28, 2008. Please call Tracy Goodwin, NEFI VP & Dir. of Events at 617-923-5015 or email tracy@nefi.com if you are interested in joining NEFI and your industry colleagues on a trip to the beautiful wine country of northern California.
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Sponsor This Newsletter!
NEFI would like to thank this month's NEON Sponsor, Beckett Corporation. For maximum exposure, your company logo and link should be on the front page of this newsletter next month. View sponsorship info and enrollment form. Call Tracy at 617-923-5015 or email tracy@nefi.com for more information.
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NEFI Member Benefit Spotlight
View NEFI Membership Information
Group Rates on Life Insurance, Accidental Death, Dismemberment and Loss of Sight Benefits and Short Term Disability. (Through Ft. Dearborn Life Insurance Company)
Life/Accidental Death & Dismemberment –
- All Employees that work 30 hours or more per week are eligible for Life/AD&D coverage
- Employee benefit amounts are based on employee salary
- $150,000 of Guaranteed Issue is provided to all employees for Life/AD&D coverage
- Benefit amounts reduce by 35% at age 70, and reduce to 50% at age 75
- Benefits Terminate at retirement
- A retiree benefit of $10,000 is available to all Owners, Proprietors and Partners; the employer must request that this benefit be added to their policy
Short Term Disability Coverage –
- All Employees that work 30 hours or more per week are eligible for Short Term Disability coverage
- Employee benefit amounts are based on employee salary
- The plan design is a benefit of 60% of employee Basic Weekly Earnings, to a weekly maximum benefit of $750
Please contact Donna Carcerano, Benefits Administrator at New England Fuel Institute
(617) 923-5020 (direct line) or (617) 924-1000 ext. 220
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Welcome New NEFI Members:
Gates Heating
Scott Gates
PO Box 341
Sharon, VT 05065
Phone: 603-252-8291
Email: namzat1968@yahoo.com
Gates Heating provides Bioheat or Biodiesel, Propane and #2 heating oil delivery service.
P.B.L.S. Ent, Inc. T/A L. S. Fuel
Rick Agoris
PO Box 248
Libertytown, MD 21762
Phone: 301-834-9701
Fax: 301-834-8903
Email: lsfuel@netzero.net
PBLS is a retail fuel dealer also dealing with kerosene, gasoline, diesel-over the road and off road, Bioheat or Biodiesel and C-stores.
Tiger Payment Solutions, LLC
Jon Predaris and Rob Fawcett
82 Main St.
Kingston, MA 02364
Phone: 781-585-4343
Fax: 781-585-1990
Email: jon@tigerprocessing.com
Web: www.tigerprocessing.com
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Thank You NEFI Action Center Contributors:
Thank you to 2008 LRAC contributors to date.
Please support LRAC Center efforts by downloading and acting upon this pledge form or by contacting NEFI at (617) 924-1000.
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U.S. & Regional Fuel Inventories
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ICPA E-Marketers Report May 5, 2008
ICPA Technical Education Center Newsletter
MODA 54th Annual Convention
Read more at www.meoil.com
Energy Answers Today
OHC-NH New Website
OHI-RI Newsletter
2008 Fuel Dealers Conference at Basin Harbor
Education & Training
Read more at www.vermontfuel.com
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